Fachbereich Wirtschaftswissenschaft

Minority Salience and Criminal Justice Decisions

with Kyra Hanemaaijer (Erasmus University Rotterdam) and Nadine Ketel (Vrije Universiteit Amsterdam)

The criminal justice system is multi-staged and features several key agents whose decisions can significantly alter the course of individuals passing through it. These decisions could be influenced by the minority status of the suspects, affecting already under-privileged groups in the population. We use very rich data on all stages in the Dutch criminal justice system (victims, crimes and decisions of all agents involved in trial) and document significant disparities by migration background in judicial decisions across all stages. These disparities cannot be fully explained by controlling for a rich set of (legally) relevant case characteristics. We next exploit a sudden shock in salience of Moroccan migration background, to causally estimate discrimination against suspects with a Moroccan migration background. We find that after the shock, sentencing outcomes for this group significantly worsened, increasing the length of prison sentence by 79 percent.

Air Pollution and Cognition in Children: Evidence from National Tests in Denmark

with Christina M. Andersen, Timo Hener, Marianne Simonsen, Lars Skipper, Jørgen Brandt, Jesper H. Christensen, Lise M. Frohn, and Camilla Geels

This paper studies the effects of daily variation in outdoor air pollution on student test scores. We utilize Danish register data of the full population of elementary and lower secondary school students, who take mandatory national tests in math and reading. We match the home address of students to a 1x1 km grid of air pollution to obtain test date and lifetime pollution measures. We find that an increase in fine particles (PM2.5), corresponding to the change from a very clean to an average polluted day, reduces student performance in math by 1.8% and in reading by 0.9% of a standard deviation. The impacts are largest in the upper part of the test score distribution in math, suggesting that higher mental processes are most susceptible to air pollution. We do not find evidence of heterogeneity by previous health conditions, socio- economics status, or life-time pollution exposure, despite using abundant amounts of register data information.

Strategic capacity investment with overlapping ownership

with Richard R. Ruble (Ecole de Management de Lyon)

Overlapping ownership has contrasting effects on capacity investments if duopoly firms invest sequentially. The follower’s reaction is less aggressive, but the leader acts more aggressively, either by choosing larger capacities or by shifting from accommodation to deterrence. If it shifts the leader’s strategy, internalization can increase consumer surplus and welfare. To endogenize leader and follower roles, we allow demand to fluctuate over time and show that, in a preemption equilibrium with internalization, leader entry occurs earlier but at a smaller scale.

”Raising the happiness of all”: is it even possible?

with Alberto Prati (UCL and Oxford University)

We revisit the Easterlin paradox about the flatness of the happiness trend over the long run, in spite of sustained economic development. With a bounded scale that explicitly refers to “the best possible life for you” and "the worst possible life for you", is it even possible to observe a rising trend in self-declared life satisfaction? We consider the possibility of rescaling, i.e. that the interpretation of the scale changes with the context in which respondents are placed. We propose a simple model of rescaling and reconstruct an index of latent happiness on the basis of retrospective reports included in unexploited archival data from the USA that we retrieved. We show that national well-being has substantially increased from the 1950s to the mid-2000s, on par with GDP, health and education. Using Gallup data from 120 countries, we also show that the happiness index generally rises with economic growth, and that it contracted during the Covid pandemic.

Networks, Sectoral Shocks, and Targeted Taxes

with Anastasiia Antonova

Sectoral shocks cause aggregate fluctuations as they transmit through production networks, distorting relative prices within and across sectors if prices are sticky. Monetary policy is then unable to implement the efficient allocation. Against this background, we study the optimal tax response to sectoral shocks in a New-Keynesian network model. It features twice as many tax instruments as there are sectors, is budget-neutral, and not confined to the sector where the shock originates. We find a simple tax rule can approximate the optimal policy arbitrarily well and illustrate the quantitative relevance of our results for a calibrated version of the model.

Machine predictions and human decisions with variation in payoffs and skill: the case of antibiotic prescribing

We analyze how machine learning predictions may improve antibiotic prescribing in the context of the global health policy challenge of increasing antibiotic resistance. Estimating a binary antibiotic treatment choice model, we find variation in the skill to diagnose bacterial urinary tract infections and in how general practitioners trade off the expected cost of resistance against antibiotic curative benefits. In counterfactual analyses we find that providing machine learning predictions of bacterial infections to physicians increases prescribing efficiency. However, to achieve the policy objective of reducing antibiotic prescribing, physicians must also be incentivized. Our results highlight the potential misalignment of social and heterogeneous individual objectives in utilizing machine learning for prediction policy problems.

The effect of a “None of the above“ ballot paper option on voting behavior and election outcomes

with Attila Ambrus (Duke University) & Anita Zednik (WU Wien)

We study how an explicit blank vote option “None of the above” (NOTA) on the ballot paper affects the behavior of voters and political candidates as well as election results. In a series of survey and laboratory experiments we identify a tradeoff regarding making NOTA an explicit voting option. On the one hand it can reduce the vote share of candidates who voters consider as protest candidates, who often come from the extremes of the political spectrum, making it less likely that such a protest candidate wins the election. On the other hand, anticipating the above effect, establishment candidates may care less about the electorate when NOTA is on the ballot. Evidence on voters' reaction to NOTA comes from two online survey experiments conducted in the weeks preceding the 2016 U.S. Presidential Election and the 2016 Austrian run-off election for President. Participants were subjected to either the original ballot paper or to a ballot paper where we added a NOTA option. We investigate the dynamic response of politicians to the presence of NOTA in a laboratory experiment in which an establishment candidate can decide between selfish and fair policy proposals and voters can choose between the establishment candidate and an inefficient protest option.

Multi-establishment Firm Structure, Subsidies and Spillovers

with Elodie Andrieu (Paris School of Economics)

How do firms diffuse resources, and does this result in spillovers far from headquarters?  We show subsidies induce French firms to hire new workers, mainly in new establishments and often in new commuting zones, with little evidence of reallocation.  The most hiring responsive occupations are techies and support workers in line with R+D targeting. We estimate a subsidy employment spillover elasticity of .11 at the commuting zone level within industry, but weak effects in the commuting zone.

Gender Differences in Pension Investment: The Role of Biased Advice

with Claudia Curi (Free University of Bozen-Bolzano), Andreas Dibiasi (Free University of Bozen-Bolzano), Matteo Ploner (University of Trento)

Using data from different pension funds in Italy, we document a gender gap in pension investments. We show that women in their twenties contribute roughly the same amount of their salary to their pension fund but choose a less volatile investment line with lower average returns. In an attempt to explain the origins of this gap, we conducted a survey experiment among pension fund advisors and found that advisors are more likely to recommend a less volatile asset allocation to women than to men. Finally, with the help of the geographic distribution of biased advice, we corroborate a potential link between biased advice and the gender investment gap in the pension fund data.

Should those who do not wish to study enter higher education?

The number of students entering higher education has been increasing for a very long time in Greece. An extension in demand for higher education was met with an increased supply of student places. As a result, the threshold for university entry did not increase. High-school students graduating in June 2021, however, faced for the first time a threshold to entering University. This has prompted a public discussion on whether admissions to and progression within universities on academic grounds should be stricter. The main point argued here is that entering University despite previous low academic performance does not typically bode well with meeting university academic standards, and thus, students take a very long time to graduate if they do. In this paper, we first document the extent to which degree completion takes much longer than the minimum required and report on the number of times students resit exams. Second, we investigate whether a policy, announced in 2007 and explicitly abolished in 2010, setting an upper limit to the number of times students can retake exams to prevent students from staying on at universities, had an impact on resits despite the fact that the policy was not enforced. Third, we estimate the sensitivity of the degree. That is, we estimate the percentage of false negatives under the assumption that if a student takes a test on one of the compulsory courses five times or more, then the student should not graduate. Finally, we estimate the extent to which students' poor academic performance could have been foreseen based on their diligence during their university studies, their grades in high school and their preferences for the study subject.

Buy or Rent: Measuring the Distributional Effects of Monetary Policy on the Housing Market

Abstract: How do the prices of properties listed for sale or rent respond to changes in monetary policy? To answer this question, we use a large online dataset of 23 million listings across 386 regions in Germany from 2007 to 2023 and high-frequency monetary policy surprises in the Euro Area. We investigate the dynamic causal effect of monetary policy changes in an IV panel local projection framework. Expansionary monetary policy has contributed significantly to the increase in house prices, with the effects being more pronounced for house sales than for rents. We then examine the differences between conventional and unconventional monetary policy tools and find a temporary response of house prices to policy rate cuts and a more pronounced effect of forward guidance and quantitative easing. Finally, we examine regional differences in housing market responses to monetary policy and show the role played by regional population growth, regulations and the city size.

Black Empowerment and White Mobilization:The Effects of the Voting Rights Act

with Andrea Bernini (University of Oxford), Marco Tabellini (Havard Business School), Cecilia Testa (University of Nottingham)